Ask a Car Nut - Part Deux

[hobbsyoyo]

To make sure I'm reading you correctly - a new car from a dealership doesn't need a mechanic inspection unless marked 'as is'?

Thanks

 

[Formaldehyde]

It depends on the dealership and their used car warranty program. Some dealers even have two year extended warranties for used cars that have passed their own extensive checks. But if it is marked "as is" you should be a lot more careful.

Check out my previous post. I apparently added a lot to it after you posted this response.

What new cars are you considering?

 

[hobbsyoyo]

Ok thanks again. I appreciate the advice.

 

[hobbsyoyo]

You make the sale conditional on the car passing an inspection by a mechanic of your own choosing. No money changes hands until it is successfully completed. If they find anything wrong use it to negotiate a lower price.

Cars you purchase from a dealership are typically a different story unless they are marked "as is". Then you should get an independent mechanic to take a look at it and be sure to get a Carfax from the dealer.

I really have no experience negotiating with a dealer over a new car purchase. But you can get a fairly accurate idea what it should sell for by getting bids on the internet. If you don't think a particular dealer is giving you a competitive price, check with others for the exact same model. But keep in mind that you are also buying convenience. You are going to have to bring it to that dealer for warranty repairs for the most part, so one 50 miles away is probably going to be less attractive than a nearby one.

It also depends on which car you are purchasing. If the vendor has back orders for that model you can pretty well forget about getting any sort of discount. You may very well have to pay a premium.

If you do decide to get a new car, you should try to find a RugbyLeagueFan who will consider you to be a long term client who wants your repeat business. Then it is in their best interests to assure that not only do you get a good price, but that you also get the proper treatment in the service department as well.

I know you were burned once before with a used car purchase that went quite bad. But you can buy a lot more car used than you can new. Let me know what new cars you are looking at and I'll find some used cars that you should consider.

Ok cool. I'll post here when I have more specifics. At this point, we've nearly got to buy a car outright and we're steadily saving up. I have thought about used cars and haven't ruled them out entirely but I am also not the only one making the buying decision. We aren't so much worried about getting screwed over like last time (which was half my fault for not knowing literally anything - I had a license for all of 2 weeks then and half the shady mechanics fault) but more worried about having to put money into maintenance on a used car whereas a new car *should* have less issues and/or a warranty of some sort.

Which reminds me I inadvertently lied a few posts back when I said I had never bought a car before. It's been so long and I had that car so briefly that I forgot about it!

 

[Zelig]

Car dealerships typically have little, if any, incentive to sell cars for less than what they know they can eventually get. That is regardless of what they paid for them.

Yes, that's what I was saying.

So we're only looking at new cars at this point so buying from an individual is unlikely. Though this may change and I'll keep your suggestions on that in mind Formaldehyde.

As for inspections - is that something you bring up when you are negotiating price? I just insist that I have an option to get it inspected with a right of refund if the inspection goes badly?

Is it unwise to get an inspection from a dealership that is also a franchise-licensed auto shop? For example, there is a Ford dealership in town that we take our car to when it needs work. If I were to buy a car from them, should I ask for an inspection at another shop?


Are there any tactics I can use to get the best price? Any way to get the dealership to come down from the sticker price? By the time we are ready to buy a car, we'll likely be able to meet the sticker price fully but I'm investigating my options and trying to figure out how to get them to lower the price. I've never bought a car before.

Thanks

If you're buying a new car it won't be marked "as is", it will have a warranty and doesn't need an inspection.

There's really not a whole lot you can do to move the price on new cars: look up what the lowest price has been in the past year due to manufacturer incentives, wait for that to roll around again, get the lowest price from all nearby dealerships. From there you can get more value in extras (accessories, credit for service, etc.) than you can in cash saved. If America has something like unhaggle you could look for that.

Ok cool. I'll post here when I have more specifics. At this point, we've nearly got to buy a car outright and we're steadily saving up. I have thought about used cars and haven't ruled them out entirely but I am also not the only one making the buying decision. We aren't so much worried about getting screwed over like last time (which was half my fault for not knowing literally anything - I had a license for all of 2 weeks then and half the shady mechanics fault) but more worried about having to put money into maintenance on a used car whereas a new car *should* have less issues and/or a warranty of some sort.

Which reminds me I inadvertently lied a few posts back when I said I had never bought a car before. It's been so long and I had that car so briefly that I forgot about it!

Depreciation on a new car will almost certainly cost you more than maintenance on a used car.

 

[hobbsyoyo]

And if we are looking to keep the car for a very long-term period, do you reckon that changes much? I could be wrong, but if I have a warranty and/or very few maintenance issues in the next 5 years, then it's worth it to me since it will likely be a decade before I look to trade in this car. By which point the difference in depreciation between the car I bought new and the (newish) car I bought used shouldn't be significant. At that point, the maintenance cost would likely also be similar, but again, I (could) save on that during the first couple of years of a new car with a warranty and/or few maintenance issues.

 

[Zelig]

Well it depends on various factors.

Maintenance costs are significant after five years, and don't dramatically increase in the long-term.

http://www.desrosiers.ca/pdfs/2002/2002-12.pdf

You can see that combining all costs, years 1-5 are more expensive per 1000 km than any subsequent year. Depreciation on a new car will cost you on average about 5x more than repairs on a 15 year old car will.

In ten years the depreciation between a new car and a one-year old car will be significant, because they'll both be worth very little after ten years, but they'll have lost the biggest amount of their value in the first year of ownership.

 

[hobbsyoyo]

In the accounting sense, yes, depreciation will bite me. As for the 'cash in my account' side of the ledger, much less so. Again, I don't plan on trading it in for a decade so the depreciation it will suffer in the first year has little bearing on me. However, if a good warranty (and a car) can save me significant maintenance, then that does have quite a bearing on me.

 

[Zelig]

How are those different things? The depreciation in the first year only affects you if you buy a new car, directly at the time of purchase. If you buy a year-old car it's a cost you never pay. New car average $24,756, one year old car averages $20,288. On purchase you save $4468 with the one year old car. (Worth close to double this after ten years if you invest the money.)

After ten years in either car, you've driven the same years 1-10 in either car, but the new car gets year 0 and the year-old car gets year 11. New car costs in year 0 for 20k of driving is $8,314, year-old car costs in year 11 for 20k of driving is $3761.6. You save $4552.4 over the ten year period.

 

[hobbsyoyo]

That makes sense. Thanks.

 

[Formaldehyde]

I seriously doubt you will keep the same car for 10 years if you are graduating with an engineering degree.

Speaking of which, wouldn't it be more sensible to buy a dependable low maintenance used car given that you are still in college?

 

[Borachio]

I know someone who buys really cheap cars. (In the UK cars don't typically dip much below the £750 mark.) He keeps them for up to a year, doesn't pay any maintenance and scraps them after that. It works out a lot cheaper than buying a brand new car and keeping it for 10 years. At least, that's the theory.

He also drives like a maniac.

 

[Zelig]

I seriously doubt you will keep the same car for 10 years if you are graduating with an engineering degree.

I have an engineering-like degree and employment and plan on keeping my car for roughly 10 years. (Depending on when it rusts apart, and how soon I can get a V60 with flywheels.)

 

[Formaldehyde]

Which car is that? And let me know how that works out for you.

 

[Zelig]

Fiesta, ten years of ownership will put it somewhere around 210k km.

 

[hobbsyoyo]

I seriously doubt you will keep the same car for 10 years if you are graduating with an engineering degree.

Speaking of which, wouldn't it be more sensible to buy a dependable low maintenance used car given that you are still in college?

I see no need to replace the new car will buy soon. Contingencies happen, of course, but it's much more likely I'll buy a second new car before I trade in this first one.

My wife isn't in college (she is gainfully employed) and I am 1 year from graduation. We've been saving for years and are a few months away from buying this yet. And it's not like we're going for a high-end luxury car, just something cheap and dependable. Our one 'luxury' I guess would be that we do prefer a new car instead of used but are in no way splurging.

 

[Formaldehyde]

Fiesta, ten years of ownership will put it somewhere around 210k km.

I guess anything is possible. I had to go to Autotrader in Britain to find any 10+ year old Fiestas. Most of them can be bought for well under $500, but there are a few with less than 70K miles that go for more.

I see no need to replace the new car will buy soon. Contingencies happen, of course, but it's much more likely I'll buy a second new car before I trade in this first one.

My wife isn't in college (she is gainfully employed) and I am 1 year from graduation. We've been saving for years and are a few months away from buying this yet. And it's not like we're going for a high-end luxury car, just something cheap and dependable. Our one 'luxury' I guess would be that we do prefer a new car instead of used but are in no way splurging.

If she has a full time job that's a bit different. But I'd still think twice about it. You can buy a car that is not cheap and still dependable for much less. But there will be the occasional maintenance costs.

 

[Zelig]

I guess anything is possible. I had to go to Autotrader in Britain to find any 10+ year old Fiestas. Most of them can be bought for well under $500, but there are a few with less than 70K miles that go for more.

That's because they weren't sold in North America between 1980 and 2010.

I expect mine to be essentially worthless when I'm done with it, $500 is the most I've ever sold a car for.

 

[Formaldehyde]

That means you would be far better off selling it much sooner. You will get more money for it, and you won't have nearly as many repair bills.

 

[Zelig]

How could that possibly be the case? Total costs (maintenance + insurance + depreciation) is pretty much always cheaper (or at least not more expensive) with an older car, so you always come out ahead financially by driving a given car into the ground.